Blog: Inhibitions – don’t lose yours
Gary Donaldson explains the art of searching the Register of Inhibitions.
Buried in amongst the many critical checks that solicitors will instruct as part of the conveyancing process is a search of what most will know as the personal register or, to give it its’ proper title, the Register of Inhibitions (RoI).
Essentially, if a seller owes someone money or has been sued by a third party, an inhibition can be taken against them, meaning the seller cannot voluntarily sell the property, transfer ownership or take out any further secured loans, such as a second mortgage, on the property.
Such a check is essential to guard against the risk that the seller may be legally barred or ‘inhibited’, from voluntarily transacting with the property they own. And this is not a theoretical, unlikely to materialise, risk; the risk is real. In 2016/17 there were some 20,000 entries in the RoI, the vast majority relating to inhibitions.
The inhibition itself follows from a court order by a creditor, and can date back as long as five years and even more if the creditor decides to re-register it. The Inhibition Order is not on the house, but on the individual person, and can be a standalone inhibition or part of, say, bankruptcy proceedings. No matter what it is, if it’s been recorded in the RoI by the creditor, then the seller cannot sell the house to avoid them potentially disposing of a major asset and not paying the debt owed in full.
The RoI is maintained by the Keeper of the Registers of Scotland, and as a public record, is open to anyone to inspect. The way it works is extremely resourceful; a sale or mortgage which breaches the inhibition can be attacked by the creditor and, in effect set aside as if it never happened. That is a major risk for a purchaser or a mortgage provider, therefore solicitors need to ensure their due diligence process is robust, and consider utilising a professional search company to carry out a ‘Personal Search’ of the RoI as part of the conveyancing process.
Although the RoI is a public register, searching it involves a high degree of skill and it’s simply not enough to search against a name and wait to see if there are any exact matches. Other more simple problems often arise, for instance, Elizabeth may appear on the title deeds but the person may go by the name of Beth or Liz and it’s one of these names that the creditor used when inhibiting her. Not to mention the many names that have multiple different spellings, Smith or Smyth and the likes. Searching is a skill and the law recognises this.
The onus on searchers is high. They must get the search right and disclose anything that may be of relevance so that the solicitor can make further enquiries to check that the person named in an inhibition is the same as one of the parties to the transaction. Just this year, it was held in a case at Dunfermline Sheriff Court that the duty a searcher owes when checking the RoI extends not just to the party who instructed the search but also extends to the creditor who is trying to recover the debt. So if the searcher gets it wrong they could find themselves having to reimburse the out of pocket creditor.
The best approach is to recognise that the method of searching must allow for any imperfections in the information registered, and to recognise that personal searching is not an exact science. Names are not unique, changes to debtor’s identities may be used to try and reduce the likelihood of debtors being found on the register, and/or a creditor may have very limited information regarding a debtors name or address. All the more reason to use one of the professional search firms when checking the RoI.
Whilst the RoI information is available to access from public registers, Millar & Bryce has purchased data in bulk from central and local government agencies to operate and maintain our own unique Personal Search Database. Our Personal Search Database is a system of indexing and retrieving personal information, disclosing an exact replica of entries from the official Register of Inhibitions, and the Register of Insolvencies. Also incorporated into our search procedures is additional relevant information gathered from other sources, providing an added value product to our customers.
Don’t get caught out – do your due diligence and avoid a title deeds disaster.
- Gary Donaldson is head of product & innovation at Millar & Bryce